Nominal exchange rates
a. vary little over time.
b. vary substantially over time.
c. appreciate over time for most countries.
d. depreciate over time for most countries.
In the United States, before OPEC increased the price of crude oil in 1973, there was
a. no price ceiling on gasoline.
b. a nonbinding price ceiling on gasoline.
c. a binding price ceiling on gasoline.
d. a nonbinding price floor on gasoline.
Suppose that the real return from operating factories in Ghana rises relative to the real
rate of return in the United States. Other things the same,
a. this will increases U.S. net capital outflow and decrease Ghanan net capital outflow.
b. this will decreases U.S. net capital outflow and increase Ghanan net capital outflow.
c. this will only increase U.S. net capital outflow.
d. this will only increase Ghanan net capital outflow.
Which of the following does the Federal Reserve not do?
a. It controls the supply of money.
b. It acts as a lender of last resort to banks.
c. It makes loans to any qualified business that requests one.
d. It tries to ensure the health of the banking system.
Which of the following costs of inflation can be significant even if actual inflation and
expected inflation are the same?
a. menu costs
b. inflation tax
c. shoeleather costs
d. All of the above are correct.
Figure 6-13
Refer to Figure 6-13. In this market, a minimum wage of $2.75 creates a labor
a. shortage of 2,250 workers.
b. shortage of 4,500 workers.
c. surplus of 2,250 workers.
d. neither a labor shortage nor surplus.
If inflation is greater than expected, then the unemployment rate is
a. above the natural rate. In the long run the short-run Phillips curve will shift right.
b. above the natural rate. In the long run the short-run Phillips curve will shift left.
c. below the natural rate. In the long run the short-run Phillips curve will shift right.
d. below the natural rate. In the long run the short-run Phillips curve will shift left.
Suppose that the equilibrium price in the market for widgets is $5. If a law increased the
minimum legal price for widgets to $6,
a. the resulting increase in consumer surplus would be larger than any possible loss of
producer surplus.
b. the resulting increase in consumer surplus would be smaller than any possible loss of
producer surplus.
c. any possible increase in producer surplus would be larger than the loss of consumer
surplus.
d. any possible increase in producer surplus would be smaller than the loss of consumer
surplus.
Which of the following is not included in U.S. GDP?
a. additions of newly produced output to inventory
b. production of U.S citizens working in foreign countries.
c. the estimated rental value of owner-occupied housing
d. the value of food purchased from a grocery store to make meals at home without pay
Assume, for the U.S., that the domestic price of wheat without international trade is
higher than the world price of wheat. This suggests that, in the production of wheat,
a. the U.S. has a comparative advantage over other countries and the U.S. will export
wheat.
b. the U.S. has a comparative advantage over other countries and the U.S. will import
wheat.
c. other countries have a comparative advantage over the U.S. and the U.S. will export
wheat.
d. other countries have a comparative advantage over the U.S. and the U.S. will import
wheat.
Which of the following questions is more likely to be studied by a microeconomist than
a macroeconomist?
a. Why do prices in general rise by more in some countries than in others?
b. Why do wages differ across industries?
c. Why do national production and income increase in some periods and not in others?
d. How rapidly is GDP currently increasing?
Holding all other factors constant and using the midpoint method, if a candy
manufacturer increases production by 20 percent when the market price of candy
increases from $0.50 to $0.60, then supply is
a. inelastic, since the price elasticity of supply is equal to .91.
b. inelastic, since the price elasticity of supply is equal to 1.1.
c. elastic, since the price elasticity of supply is equal to 0.91.
d. elastic, since the price elasticity of supply is equal to 1.1.
A bank’s assets equal its liabilities under
a. both 100-percent-reserve banking and fractional-reserve banking.
b. 100-percent-reserve banking but not under fractional-reserve banking.
c. fractional-reserve banking but not under 100-percent-reserve banking.
d. neither 100-percent-reserve banking nor fractional-reserve banking.
Unemployment numbers reported by the Bureau of Labor Statistics are reported based
on a
a. monthly survey of about 60,000 households
b. monthly survey of about 6,000 households
c. weekly survey of about 60,000 households
d. weekly survey of about 6,000 households
If the supply of dollars in the market for foreign-currency exchange shifts left, then the
exchange rate
a. rises and the quantity of dollars exchanged falls.
b. rises and the quantity of dollars exchanged does not change.
c. rises and the quantity of dollars exchanged rises.
d. falls and the quantity of dollars exchanged does not change.
The long-run Phillips curve would shift left if
a. the money supply increased or if the minimum wage was reduced.
b. the money supply increased but not if the minimum wage was reduced.
c. the minimum wage was reduced but not if the money supply increased.
d. None of the above is correct.
If U.S. citizens decide to save a larger fraction of their incomes, the real interest rate
a. decreases, the real exchange rate of the dollar depreciates, and U.S. net capital
outflow increases.
b. decreases, the real exchange rate of the dollar appreciates, and U.S. net capital
outflow decreases.
c. increases, the real exchange rate of the dollar appreciates, and U.S. net capital
outflow decreases.
d. increases, the real exchange rate of the dollar depreciates, and U.S. net capital
outflow increases.
Table 3-18
Chris and Tony’s Production Opportunities
Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table
shows their possible production per month if both work the same number of 8 hour
days. Given this information, Chris’s opportunity cost of 1 lb. of tomatoes is
a. 2 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 3 jars of sauce.
b. 3 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 2 jars of sauce.
c. 20 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 30 jars of sauce.
d. 30 jars of sauce and Tony’s opportunity cost of 1 lb. of tomatoes is 20 jars of sauce.
Table 15-3
2010 Labor Data for Adults (age 16 and older) in Meditor
Refer to Table 15-3. What is the adult male labor-force participation rate in Meditor?
a. 37 percent
b. 63 percent
c. 66.7 percent
d. 96.3 percent
Which of the following statements about the effects of rent control is correct?
a. The short-run effect of rent control is a surplus of apartments, and the long-run effect
of rent control is a shortage of apartments.
b. The short-run effect of rent control is a relatively small shortage of apartments, and
the long-run effect of rent control is a larger shortage of apartments.
c. In the long run, rent control leads to a shortage of apartments and an improvement in
the quality of available apartments.
d. The effects of rent control are very noticeable to the public in the short run because
the primary effects of rent control occur very quickly.
In the United States, as measured by real GDP per person, average income is about how
many times as high as average income a century ago?
a. 2
b. 4
c. 6
d. 8
If the Fed raised the reserve requirement, the demand for reserves would
a. increase, so the federal funds rate would fall.
b. increase, so the federal funds rate would rise.
c. decrease, so the federal funds rate would fall.
d. decrease, so the federal funds rate would rise.
Which of the following is included in GDP?
a. medical marijuana purchased from a government-run pharmacy by a glaucoma
patient
b. recreational marijuana purchased from a drug dealer by a college student
c. recreational marijuana produced and consumed by a man in his attic
d. All of the above are included in GDP.
In which case can we be sure real GDP rises in the short run?
a. the money supply increases and taxes rise
b. the money supply increases and taxes fall
c. the money supply decreases and taxes rise
d. None of the above are correct.
The Karmic Deed Restaurant uses all of the following to produce vegetarian meals.
Which of them is an example of physical capital?
a. the owner’s knowledge of how to prepare vegetarian entrees
b. the money in the owner’s account at the bank from which she borrowed money
c. the tables and chairs in the restaurant
d. the fresh fruits, vegetables, and grains the restaurant uses to prepare its meals
Table 15-1
Labor Data for Aridia
Refer to Table 15-1. The labor force of Aridia in 2010 was
a. 1400.
b. 1600.
c. 1800.
d. 2000.
During World War II, the economy’s production increased about
a. 25 percent and prices rose about 5 percent.
b. 50 percent and prices rose about 10 percent.
c. 75 percent and prices rose about 15 percent.
d. 100 percent and prices rose about 20 percent.
Suppose that a small economy that produces mostly agricultural goods experiences a
year with exceptionally good conditions for growing crops. The good weather would
a. shift both the short-run aggregate supply and the short-run Phillips curve right.
b. shift both the short-run aggregate supply and the short-run Phillips curve left.
c. shift the short-run aggregate supply curve to the right, and the short-run Phillips
curve to the left.
d. shift the short-run aggregate supply curve to the left, and the short-run Phillips curve
to the right.
Which of the following are taxed?
a. both corporate profits and dividends paid to stockholders
b. corporate profits but not dividends paid to stockholders
c. dividends paid to stockholders but not corporate profits
d. neither corporate profits nor dividends paid to stock holders
In 2009, the imaginary nation of Mainland had a population of 7,000 and real GDP of
210,000. In 2010 the population was 7,300 and real GDP of 223,380. Over the year in
question, real GDP per person in Mainland grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred
years.
b. 2 percent, which is about the same as average U.S. growth over the last one-hundred
years.
c. 4 percent, which is high compared to average U.S. growth over the last one-hundred
years.
d. 4 percent, which is about the same as average U.S. growth over the last one-hundred
years.
Which of the following is most likely to increase exports?
a. a reduction in domestic political instability
b. ending investment tax credits
c. a reduction in the size of the government’s budget surplus
d. None of the above will increase exports.
The Federal Reserve
a. designs tax policy.
b. enforces the nation’s antitrust laws.
c. sets the nation’s monetary policy.
d. analyzes data on workers.
Table 10-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
Year Nominal GDP Real GDP
1929 103.6 977
1930 91.2 892.8
1931 76.5 834.9
1932 58.7 725.8
Refer to Table 10-3. What was the growth rate of real GDP for 1930?
a. -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP.
b. -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP.
c. -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP.
d. -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP.
Table 10-2
The table below contains data for the country of Crete for the year 2010.
Refer to Table 10-2. What were Crete’s net exports in 2010?
a. -$217
b. -$88
c. $88
d. $217
Although growth rates across countries vary some, rankings of countries by income
remain pretty much the same over time.
When the price of a good is low, selling the good is profitable, and so the quantity
supplied is large.
In an open economy, national saving can be less than investment.
The effects of borrowing by the federal government would be studied by a
microeconomist rather than a macroeconomist.
The law of supply states that, other things equal, when the price of a good rises, the
quantity supplied of the good falls.
According to the open-economy macroeconomic model, if the United States moved
from a government budget deficit to a government budget surplus, U.S. real interest
rates would increase and the real exchange rate of the U.S. dollar would appreciate.
If the quantity of money supplied is greater than the quantity demanded, then prices
should fall.
One study found that unemployment is the economic term mentioned most often in U.S.
newspapers.
Public policy can reduce the economy’s natural rate of unemployment.
The catch-up effect refers to the idea that poor countries, despite their best efforts, are
not likely ever to experience the economic growth rates of wealthier countries.
Explain how tax provisions to encourage private saving may reduce national saving.
Recessions occur at irregular intervals and are almost impossible to predict with much
accuracy.
Workers determine the supply of labor, and firms determine the demand for labor.
Almost half of all spells of unemployment end when the unemployed person leaves the
labor force.
When markets fail, public policy can potentially remedy the problem and increase
economic efficiency.
Most goods whose purchases are included in the investment component of GDP are
used to produce other goods.